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Multi Faceted

ICICI Pru Dynamic aims to minimise downside risk by adopting a defensive strategy in a bull market. When markets are at a high, it builds cash position

ICICI Prudential Dynamic is a growth oriented fund that invests across market capitalization and sectors with a bottom up approach of investing. What differentiates this multi-faceted fund from other opportunity funds is that it aims to minimise downside risk by adopting a defensive strategy in a bull market. When the markets get too hot, (overvalued) the fund runs for cover by building its cash position.

Consequently, the fund is saddled with a large corpus in cash as the market goes up. At the end of June 2007, when markets were trading at an all time high, the fund held 12.6 per cent of its assets in cash.

But this has not held the fund back. Logically, the mandate of the fund is such that during a bull run, its gains would be capped, since a portion of its portfolio fails to participate in the market's upside. But so far the performance delivered by the fund has defied such theoretical reasoning and the fund manager's astute calls catapulted the fund to the fifth best performing fund in 2006.

As far as protecting downside goes, the investment strategy has met with reasonable success. During the two recent corrections the fund lost much less than the average diversified equity fund - in the June 2006 quarter (April-June 2006), the fund lost (-) 11.21 per cent against the category's loss of (-) 13.6 per cent. For the quarter ending March 2007, the fund lost (-) 4.23 per cent compared to the category's slide of (-) 5.93 per cent.

While there are other hybrid asset allocation funds functioning, none of them can hold a candle to ICICI Prudential Dynamic's truly dynamic performance.